2010 SOE works in progress

December2010/January 2011
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THE Ministry of Works and Transport’s (MWT) review of the year just gone by reflects a series of achievements and challenges for the ministry and its subsidiaries, most of who are crucial to the country’s industrial development.

According to the Minister, Erkki Nghimtina: “The period under review was characterized by a process of ongoing familiarization activities undertaken, in line with its core mandate, which is the development of sector policy and regulation, and ensuring infrastructure development, maintenance and management of transport and state assets.”

The global economy according to the Bank of Namibia experienced extraordinary policy interventions during the crisis in 2008 and 2009; however, there were signs of recovery in 2010 due to the robust growth especially in the Asian Economies and stability from the developing economies, though this recovery still remains fragile.

The recovery on the global front has some positive impact on the Namibian economy as it has shown some slight growth.

According to “the National Accounts released in 2009, the Namibian economy was expected to grow by 4.2% in 2010 after a contradiction of 1%” in 2009 which is in line with the projected improvements in the 2010 economic performance.

The ministry’s transport sector was anticipated to contribute a growth of 2.9 percent during 2010 compared to 2.3 percent estimated for 2009 together with the communication sector.

It was upon these statistics that the ministry placed much concentration on its subsidiaries, the State-Owned Enterprises (SOEs).

State-Owned-Enterprises (SOEs)

The following six SOEs, of which some entered into Performance and Governance Agreements with the minister in 2010, are resorting under the Ministry of Works and Transport namely: Motor Vehicle Accident (MVA) Fund, Roads Constructor Company(RCC), the Namport, Namibia Airport Company (NAC), TransNamib Holdings Ltd and the Roads Authority.

MVA Fund

Highlights at the MVA Fund included the extension of the term of office for the Directors to ensure continuity and propel the institution to new business heights, approval of the MVA Fund Investment Policy by the minister in accordance with the SOE Governance Act.

The enterprise’s wide risk assessment was completed by the Fund’s Internal Auditors, Ernest & Young and the annual Audit Plan was developed and subsequently approved by the Statutory Board.

The Audit findings are monitored regularly to ensure compliance with the recommendations and that identified risks are mitigated. The Fund’s Succession Plan framework has been agreed by the Board and staff capacity is being enhanced to ensure critical skills development and smooth succession at different levels of the institution.

With regard to the succession of the CEO, senior managers’ responsibilities have been realigned to expose them to different business functions.

It was found that the Fund remains resolute in providing excellent service and maintains high public confidence.

Equally, the Fund plays a pivotal role in alleviating the pride of people disabled in vehicle crashes and has forged strategic alliances with different stakeholders to ensure the injured are treated, rehabilitated and returned to productive life.

While the Fund appreciates government’s support, the fast tracking of proposed legislative amendment bill and support for proposed additional revenue sources are crucial for maintaining the Fund’s financial sustainability.

Road Contractor Company (RCC)

The Roads Contractor Company (RCC) continues to make substantial progress in the implementation of its business turnaround plan which is guided by key delivery result.

The RCC continues to place much focus on its core business, which are road construction, rehabilitation, maintenance and related civil works projects such as crushing for aggregates and railway construction.

The company recently embarked on the sale of aggregates at its Tsumeb Crusher. The aggregates will also be transported to Ondangwa due to the high demand in that area as a result of the increased building construction activities. The RCC undertook to appoint SMEs to transport the aggregates to Ondangwa as part of its corporate responsibility to build capacity development as well as to diversify other sources of income.

As a result of the above decision, the company is much focused on its business operations thus realizing net profits before bad debts.

The company has achieved a profit of N$6 million before bad debts, (which represent the bridging financing of subsidiaries) was realized compared to a loss situation same period last financial year which was N$11.9 million (loss). The cash flow has improved from an overdraft of N$13 million to a positive cash bank balance of N$6.6 million.

Namibia Port Authority (Namport)

The major project currently under way is the strategic expansion of the Walvis Bay Container Terminal at a cost of N$2 billion. Namport has embarked on the development of a new container terminal at the Port of Walvis Bay where Phase I of the project is expected to be completed in 2013.

In addition to such expansion initiatives, ports must ensure their facilities have modern container handling equipment as well as well-trained and motivated human resources to address the ongoing demands of shipping lines for continuous improvement in labour and equipment productivity and efficiencies.

The port of Walvis Bay is a major contributor to the economy of Namibia and is a vital link in the logistics chain in sub-Saharan Africa. It is consequently essential that the port remains competitive to ensure its sustainability in the future and its continued contribution to the economies of Namibia and the SADC Region. It is therefore crucial that port development ahead of future demand takes place so that it can accommodate the container handling capacity demands and larger vessels of shipping lines.

TransNamib Holdings

As part of the familiarization visits, the Deputy Minister, Chief Samuel Ankama; accompanied by high-ranking officials from the Ministry of Works and Transport paid a visit to TransNamib in July where he met with senior managers of TransNamib as well as Board Members.

Titus Haimbili, Chief Executive Officer of Trans-Namib, said during the visit that the company acknowledged the legacy of challenges it had to overcome and was committed to address.

He added that TransNamib was not promising miracles but was ready and willing to lay a sound foundation for the railways in Namibia. Haimbili noted that TransNamib could become a vital part of railway infrastructure in Africa, a critical development need according to the African Development Bank.

The domestic economy and the potential growth within some of the major sectors present huge growth opportunities for TransNamib Holdings Ltd that will contribute positively to the bottom line if only captured and turned into tangible results.

However, efforts to make this a reality are being hampered by many factors among others lack of capacity and aged rail line. For example, all the major sectors such as fuel, agriculture, building, bulk liquid containers, have resorted to using road transportation due capacity constraints being experienced by TransNamib Holdings Limited.

Roads Authority (RA)

The Roads Authority (RA) is involved in a number capital projects that are currently in progress or have been completed.

These include the upgrading of the Rundu – Elundu Road in different phases costing around N$1 billion. A number of joint venture initiatives between the Roads Contractor Company (RCC) and other private companies have been signed to have the different lengths of the road constructed.

The RA is also involved in the Tsumeb – Katwitwi, sections A and B, totalling about 140 km, with a total amount of about N$600 million to be spent until completion next year (2011). Upgrading of the Gobabis – Drimiopsis - Otjinene Road has also taken place at a cost of N$380 million and so has Phase 1 of the Karibib-Okahandja Road at a cost of N$290 million. Phase 2 of the project has already commenced with an estimated total cost of about N$125 million.
Other smaller projects are currently taking place in various part of the country, particularly in Northern Namibia where the RA is in joint venture with a number of local firms and all these developments combined are estimated to be multi-billion dollar projects.

The smaller projects include upgrading of tarred and gravel road projects through labour-based methods as a means of empowering the local community as well as provision of employment opportunities. Such projects have been identified in all the 13 regions of the country and the RA and government have been very instrumental in mobilising funds for these projects.

Namibia Airports Company (NAC)

The NAC successfully continued with a number of crucial development projects at their airports, with the main one, the Hosea Kutako International Airport (HKlA) Runway Rehabilitation Project, receiving an additional N$120 million for the resurfacing of maintenance roads.

All the major airports under the NAC management are expected to undergo different phases of rehabilitation and development.

Familiarisation Tours

The minister and his delegation which included his deputy Chief Samuel Ankama visited Omaheke, Hardap and Karas Regions in July 2010 to familiarize with the ministry’s ongoing as well as completed capital projects in the regions.

Visit to Omaheke Region

The minister met with the governor, Laura McLeod who was accompanied by the Local Authorities Councillors and Regional Council Officials. He urged the Regional Council and Local Authorities to work closely together in order to enhance the development of the infrastructure of the Region. He also emphasized the need for joint supervision and monitoring activities by the Regional Council and Local Authorities within the framework of government decentralization policy.

The governor informed the minister that the challenges facing the Region included those of roads, housing and the need to improve the town of Gobabis.

The minister responded saying that, regarding government houses, Cabinet has taken a decision this year according to which tenants would take the responsibility of maintaining the houses with the possibility of outsourcing of the maintenance service.

Visit to Hardap Region

During his visit to the Hardap Region, the minister met with the acting governor, Regional Councillors, Local Authority and government officials. The governor thanked the Ministry of Works and Transport for implementing the rural electrification programme which has benefited many schools in the Hardap Region.

Issues of roads, housing and staffing at government offices were raised and the minister promised to work on the progress.

Visit to Karas Region

The minister met with the governor and councillors. The governor expressed his concern about the dilapidating government infrastructure in the Regions which requires special maintenance. He further informed the Minister that the Keetmanshoop Airport was dormant, and this has affected the operations of the Aviation Training Academy.

The planned Storage Facility at the Keetmanshoop Airport has also not taken place as planned. Government’s plan to set up an Airplane Assembly Plant in Keetmanshoop has not yet materialized, although a piece of land has been made available. The delegation also visited construction projects in Karasburg and Noordoewer.

Visit to Lϋderitz

The minister visited Luderitz and held a meeting with the management of Luderitz Town Council. Briefing the minister, the Mayor said that the challenges facing the town include slow development, lack of railway lines as well as lack of tarred roads.

The minister also met with the CEO of the Luderitz Waterfront Development Company Fluksman Samuehl. The CEO informed the minister about the development undertaken by the Company and thanked the Ministry of Works and Transport for having donated the assets and land to the company to accelerate the development.

Department of Works

The Department of Works is one of the biggest departments that is responsible for the planning, management and maintenance of government buildings and other relate infrastructure.

Challenges that were identified at the Department of Works include delayed payments of invoices/payments certificates by line ministries that are hampering the progress by contracts and government institutions.

Other hindrances in the department include wet construction sites during rainy season, limited funds per project, scarcity of quality construction materials and scarcity of water for construction in some areas.

Conclusion and Recommendations

In summary, as one of the key role-players in the process of infrastructure development and the facilitation of capital project implementation, there is no doubt that much has been achieved over the period under review. However, there are numerous challenges that hamper the process of speedy implementation of major sector development projects.

Some of the recommendations made are as follows:

There is urgent need to address the structural defects of the Gobabis State
Hospital though the Ministry of Health and Social Services.

Tenants occupying BM 51/10 which is in Mariental assigned to Ministry of Health and Social Services must be relocated and the houses be demolished as a matter of urgency.

Mariental Airfield is an underutilized asset and should be put to optimum usage.

Government should, as a matter of priority, find a viable solution to Keetmanshoop’s dormant airport. It is equally important that the planned Storage Facility at the airport is put in place, and that government’s plan to set up an Airplane Assembly Plant in Keetmanshoop should be given priority as well as a refuelling facility at the airport.

Department of Works: Directorate Capital Project Management in conjunction with stakeholders should find ways to involve Regional Councils in the implementation of capital projects undertaken in the Regions.

Heads of Departments should undertake visits to the Regions to familiarize themselves with the ongoing projects and the conditions of staff in the Regions.

The ministry should identify and address the gaps in the coordination amongst Regional Councils, Local Authorities and ministries in the implementation of government projects, in particular to device mechanisms to build the capacities of Small and Medium Enterprises (SMEs).

That the entire process of the approval of Development Budget be expedited to enable payments of invoices/payment certificates to contractors for various capital projects by line ministries on time.

That Cabinet renders necessary support to the Ministry of Works and Transport to ensure that Namibia addresses successfully its safety and security critical deficiencies as was highlighted during successive Audits by the International Civil Aviation Organization through the appointment of its experts in the five areas of specialty (airworthiness, aerodromes certification, aviation security, personnel licensing and flight operations).